First-Time Home Buyer Tax Credit

It just makes sense that the first post of my first blog should address…first-time home buyers. All year long I’ve been haunted by the big green monster, jealousy. With my youngest child just 19 months from his high school graduation, my wife and I are ready for a major downsize. With the prospect of re-entering the housing market I keep asking myself two questions. First, “is there a way to close on a new home before December 1st? And second, the $8,000 question “is there some loophole where my new purchase looks like a first-time purchase?”

Of course, I’m referring to the current tax credit for first-time home buyers. Wow, what a time to be buying your first home. It’s like the perfect storm, homes selling at six year lows, interest rates below six percent, and a whopping eight thousand dollars off your 2009 tax liability. But, I have bad news too. To qualify you have to close on your new home by November 31st. So, unless you have a bundle of cash or private financing, and a very motivated seller, it will be near impossible to make that deadline.

On the brighter side, we have seen such a nice rebound on home sales since March that lawmakers will most likely extend the credit into 2010. With the extension you will need a signed contract by April 30th and title must transfer by June 30th. And just to tease me a little more they’ll keep the green monster alive by offering $6,500 to buyers who’ve owned their current home for five years or more and want to trade up. I wonder if I can convince my son to study a little harder and graduate in 7 months.

There are other stipulations to qualify for the tax credit so for detailed information you can visit the IRS here.

Update 11/2/09

Pending home sales were reported this morning with a surprising 6.1% increase which is close to a 3 year high. Positive news like this certainly gives Congress incentive to pass the proposed extension!